From [HERE] and [HERE] DETROIT—Federal law-enforcement officials reached a $3.6 million settlement with Citizens Republic Bancorp over allegations that branches of its banks discriminated against Detroit's black residents by improperly favoring white residents in southeastern Michigan.

The Justice Department alleged in court papers that branches of Republic Bank and Citizens Bank, which are now owned by Citizens Republic Bancorp, "essentially provided its services in a horseshoe" around Detroit, engaging in redlining "intended to deny and discourage, or have the effect of denying or discouraging, an equal opportunity to the residents of the majority-black neighborhoods" in Detroit.

"This is a case about the systematic and discriminatory denial of access to credit for qualified borrowers in majority African-American communities in Detroit and a number of surrounding areas," Thomas Perez, assistant U.S. attorney general for civil rights, said at a news conference in Detroit.

"The American dream of home ownership should be accessible to all qualified home borrowers," he added.

In 2007, Citizens Banking Corp. acquired Republic Bank and became Citizens Republic Bancorp. A bank company spokesman didn't immediately return a call for comment.

Citizens Republic Bancorp had total assets of $10.6 billion, with $8.1 billion in deposits, as of October of last year, according to court papers. Its largest operation is in Michigan through its Citizens Bank subsidiary, which has more than 150 branches.

Citizens Republic Bancorp currently operates nine branches within twenty miles of Detroit, but all of branches save one are located in majority-white census tracts. None are in the city limits of Detroit.

As part of a proposed settlement that still needs court approval, Citizens will invest $1.625 million in a partnership with the city of Detroit by providing existing homeowners with matching grants of up to $5,000 to fund exterior improvements. The bank also pledged to spend $1.5 million in a financing program to increase credit to majority African-American areas in Wayne County which surrounds Detroit, and to spend $500,000 for outreach to alert potential customers.

Citizens Bank will also open a loan office in a majority African-American area in Detroit and conduct fair-lending training for its employees, according to federal officials.

In court papers, Citizens Republic Bancorp didn't admit any wrongdoing and argued that a proper analysis of its lending performance reveals that it has provided residential mortgage credit fairly and without discrimination. "Based on previous regulatory reviews of Republic Bank's mortgage lending coverage, we believe there is no foundation for this claim," the company said in a statement Thursday afternoon. "Despite our disagreement with this allegation, it is in the company's best interest to settle."

The settlement came after a U.S. Justice Department investigation that accused the bank between 2006 and 2008 of violating the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race in their mortgage lending practices.